India and Myanmar Start New Trade Payment System
India and Myanmar have launched a new trade payment system using local currencies. The first transaction, over Rs 1 crore for a shipment of pulses, was completed by Punjab National Bank’s Yangon office.
Rupee-Kyat Settlement Mechanism
This system, called the Rupee-Kyat Settlement Mechanism, aims to simplify trade by avoiding exchange rate issues. The Central Bank of Myanmar introduced guidelines for this system in January, and it covers both sea and border trade.
Encouragement from Indian Embassy
The Indian Embassy in Yangon encourages businesses to use this new mechanism. They stated on X, “Rupee-Kyat trade settlement mechanism is operational now. The first transaction of over INR 1 cr of pulses export was successfully executed by Yangon office of @pnbindia today. We encourage businesses on both sides to benefit from the mechanism.”
Background Information
The payment mechanism was officially announced on April 13. The rupee-kyat settlement mechanism can be done through the Punjab National Bank when Indian traders import pulses from Myanmar. Banks from several countries have opened special Rupee Vostro accounts in Indian banks to trade in local currencies. Vostro accounts enable domestic banks to provide international banking services to clients who have global banking needs. The Reserve Bank of India last year put in place an arrangement allowing transactions in domestic currencies to promote the growth of global trade with an emphasis on exports from India.
